Good interview with GMO’s Jeremy Granthan looking at the investment implications of declining population growth, the end of the debt super-cycle, lower global GDP, and the historical prospects of the first year of the US Presidential Cycle which we entered on October 1. See: Charlie Rose talks with Jeremy Grantham:
“As an investor, what do you do?
“I’ve hero-worshipped the presidential cycle. Going back to 1932, if you take the first and second year together, they’ve had no real return in the market. All of the return has been compressed into a gigantic Year Three and a respectable Year Four. For us, the cycle years start on October 1st. So now we’re in the dreaded first year. And we have Republicans threatening to add fiscal constraints into a very fragile economy. We have the European situation. We have China stumbling in an incredible slow-motion style. I think it’s a really good year to keep your head down….
I am going to be careful, particularly for the first half of next year. Great brands of blue chips are not so bad in the U.S. Emerging countries are about fair price. Beaten-down European stocks, particularly the so-called value stocks, are probably a little cheap, although risky. And resource stocks, once they reflect the weak economy—and we’ll get another whack-down—will be a wonderful long-term purchase. Farmland and forests, which should be the backbone of any long-term, serious portfolio. … It will also be a good time to buy in. “
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After watching the Buttonwood Gathering online this past week – everyone should read Paper Promises by the host Philip Coggan – Mr. Grantham is icing on the cake. One of the most sensible people in the investing “community”